Defense Cuts Will Kill Massive Number of Jobs

When it comes to jobs in the US aerospace and defense industry, the White House and the Democrats have been responsible for directly killing at least 39.000 jobs between 2008 and 2010. This estimate is based on figures published by the Aerospace Industries Association (AIA).

Now the AIA has just published a study showing that roughly one million jobs will be lost if the catastrophic defense budget cuts -- supposed to happen automatically as set up byt the "Supercommittee" in the aftermath of last summer's debt ceiling deal -- has failed to come up with an acceptable solution to the nation's fiscal problems. The Defense Department cuts , possibly amounting to as much as a trillion dollars, would entail job losses in the hundreds of thousands. Including jobs that would be lost through indirect effects as reported by the AIA, bringing the total of jobs lost to to more than a million, and adding more than half a percentage point to the national unemployment rate. The losses would be concentrated in California, Virginia, Texas and Massachusetts.

Moreover, the million American jobs lost in this round of budget cuts might be just the first. If the US falls into an austerity trap, in which budget cuts and tax increases choke off economic growth, such as the ones currently plaguing the Greeks, Spaniards and Italians, the outlook for jobs could get even worse. Without growth, the sacrifices needed to service the massive national debt and at the same time to pay the Social Security, Medicare and Medicaid benefits, will force even further huge cuts in both the defense and non-defense parts of the Federal budget.

There are roughly six million jobs directly associated with America's Aerospace and Defense industries. If the US were to lose one or two million of these jobs on top of all the jobs that have been lost since 2008, the effect would be devastating. The loss of US superpower status would tear into the US Government's ability to borrow money at relatively low interest rates. The future of the dollar as the world's major reserve currency, which depends in part on America's raw military power, would be in doubt.

If the US were to devote as much to its defense as, say, France -- 2.5% of GDP in 2010 -- instead of the roughly 4.5% it now spends on national security, its ability to secure the peace in places as diverse as Central Europe and Central America or the Indian Ocean would disappear. Middle East and South Asian turmoil would drive up the price of crude oil and other commodities, prolonging the global recession and making it even harder to balance the the US budget.

It is important to note that Europe's current economic difficulties are in no way caused by excessive military spending. Greece, largely due to the ongoing tension with Turkey spent 3.2% of GDP in 2010; Italy spent 1.8% and Spain spent 1.1%. As a rule of thumb, serious economic problems caused by defense spending do not develop unless a nation devotes more than 10% of its GDP to its military forces. This is what happened to the Soviet Union in the 1980s, when it devoted at least 14%, perhaps a lot more, of its GDP to its military establishment.

The relationship between economic growth, jobs and defense spending is murky, to say the least. Military programs can sometimes result in major commercial technological breakthroughs, such as microelectronics or the internet. Military spending, however, is a wasteful method of producing results that might be done better by venture capitalists; yet history shows that the US defense department has been amazingly successful in fostering new technology. Economists may just have to learn to readjust.

One thing Franklin Roosevelt, Nicolas Sarkozy and Mitt Romney have in common is a belief that building naval ships is a good thing -- for both national military power and for employment. Shipbuilding not only requires a lot of blue collar labor to build the ships, it also uses vast quantities of steel, and other material, most of which comes directly from US industry.

In the 1930s, FDR used a portion of his New Deal , and Works Progress Administration to build a class of cruisers for the US Navy. In 2009 when Obama was promoting his Stimulus package -- which conspicuously lacked any military spending --- French President Nicolas Sarkozy pushed through the French Parliament a stimulus bill that included money for an extra amphibious assault ship. Mitt Romney's defense plan, which he recently presented in South Carolina, included a promise to increase shipbuilding from nine ships a year in the current plan to 15. Increased shipbuilding would seem to be a winning policy, both economically and strategically .

Military spending is more than just an insurance policy; it is an investment in national power. Other aspects of national power, such as economic growth, science and technology education, and sound fiscal and monetary policy, are all part of the mix that gives a nation significant clout on the global stage. To dismantle US military power in pursuit of government solvency is to throw one part of America's power unnecessarily to the wolves in the hope that the other parts may survive. Military weakness will not balance the budget, grow the economy or find anyone a job.

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